A: The Icon was the KFC logo,
B: It became Iconic after its huge commercial success of offering cheap home-cooked style food with the iconography which resembled a loving view of the south.
C) It was modified to be OFC for Obama Fried Chicken in Beijing.
D) The Beijing community is dismissive on the issue, claiming it doesn't disrupt their daily lives and rather see it as novel place to eat. The KFC executives are outraged and appalled that they would make a spin off like that, even going so far as to use a caricature of a leader of the free world, as a mockery.
E) Even if they had used a sign with the American flag and some chickens it would have sent a message that this was an eating establishment that specialized in American chicken. And it would have caused way less controversy